Under the standard SEBI framework, an AIF registration in India generally needs a minimum corpus of ₹20 crore per scheme. However, the minimum investment from an individual investor is usually ₹1 crore, while the sponsor or manager must also make a prescribed continuing investment in the fund.
These are three different requirements, and understanding them is important before you start planning your fund.
If you’re exploring AIF Registration in India, you may already know that Alternative Investment Funds allow investors to pool capital for investments in private equity, venture capital, real estate, debt and other permitted assets.
But launching an AIF isn’t simply about collecting money from investors. You also need to choose the right fund structure, meet SEBI’s eligibility conditions, prepare legal documents and arrange the capital required to operate the fund.
Let’s understand the investment requirements, registration process and expenses involved in setting up an AIF.
What Is an Alternative Investment Fund (AIF)?
An Alternative Investment Fund is a privately pooled investment vehicle that collects funds from eligible investors and invests according to a defined investment policy.
In India, AIFs are regulated by the Securities and Exchange Board of India (SEBI).
Unlike traditional mutual funds, AIFs generally focus on investment strategies designed for sophisticated investors who can understand the risks involved.
Depending on their category and investment objectives, AIFs may invest in:
- Startups and early-stage businesses.
- Private equity opportunities.
- Infrastructure projects.
- Real estate-related investments.
- Debt and other permitted securities.
- Listed and unlisted securities.
- Other assets allowed under the applicable SEBI regulations.
AIFs are broadly classified into Category I, Category II and Category III. Each category follows different investment strategies and regulatory conditions.
What Is the Minimum Corpus Required to Start an AIF in India?
For a standard AIF scheme, the minimum corpus requirement is generally ₹20 crore.
The corpus refers to the total amount of capital committed by investors to a particular scheme.
This doesn’t necessarily mean the entire ₹20 crore must be deposited into the fund’s bank account on the first day.
In many AIF structures, investors make legally binding capital commitments, and the fund calls for money when investments need to be made.
How Does the ₹20 Crore Corpus Requirement Work?
Suppose you’re launching a Category II AIF focused on investing in growing Indian businesses.
You secure commitments from:
- Investor A: ₹5 crore.
- Investor B: ₹4 crore.
- Investor C: ₹3 crore.
- Investor D: ₹3 crore.
- Investor E: ₹5 crore.
The total committed capital is ₹20 crore.
This illustrates how several investors can collectively meet the corpus requirement. However, the fund must also satisfy SEBI’s rules regarding eligible investors, investment commitments and fundraising.
Are There Exceptions to the ₹20 Crore Requirement?
Yes. Not every AIF structure follows exactly the same minimum corpus requirement.
For example:
- Angel fund schemes: The prescribed minimum corpus is generally ₹5 crore.
- Standard Category I, II and III AIF schemes: The general minimum corpus requirement is ₹20 crore.
- Certain specialised AIF structures: Different conditions or exemptions may apply under SEBI’s framework.
Before deciding on your fundraising target, check which rules apply to the category and structure you’re proposing.
What Is the Minimum Investment Per Investor in an AIF?
For most standard AIFs, the minimum investment from an individual investor is ₹1 crore.
This threshold helps distinguish AIFs from investment products intended for smaller retail investors. However, there are important exceptions.
Investment by Employees and Directors
Employees or directors of the AIF or its manager may invest a minimum of ₹25 lakh, subject to the applicable conditions.
Investment Through Angel Funds
Angel funds have separate investor eligibility and investment rules. The standard ₹1 crore minimum should not automatically be applied to every angel fund arrangement.
Accredited Investors
SEBI’s framework provides certain relaxations for accredited investors and qualifying structures. The precise treatment depends on the applicable regulations and the fund’s structure.
If you’re setting up an AIF, don’t assume that every investor must contribute exactly ₹1 crore. The correct threshold depends on the investor’s status and the scheme’s regulatory classification.
How Much Must the AIF Sponsor or Manager Invest?
One of the most overlooked expenses when starting an AIF is the sponsor’s or manager’s continuing interest.
SEBI requires the sponsor or manager to maintain a prescribed investment in the fund so that their financial interests remain aligned with those of investors.
Category I and Category II AIFs
For standard Category I and Category II AIFs, the continuing interest is generally:
- 2.5% of the corpus, or
- ₹5 crore,
whichever is lower.
For example, if a Category II AIF has a corpus of ₹20 crore, 2.5% works out to ₹50 lakh.
The applicable continuing interest would therefore be ₹50 lakh under the standard requirement.
Category III AIFs
For standard Category III AIFs, the continuing interest is generally:
- 5% of the corpus, or
- ₹10 crore,
whichever is lower.
For a Category III AIF with a ₹20 crore corpus, 5% would be ₹1 crore.
These requirements can differ for certain specialised structures, including angel funds and other qualifying arrangements.
Also, the sponsor’s or manager’s continuing interest cannot ordinarily be satisfied merely through a waiver of management fees.
Is ₹20 Crore the Actual Cost of AIF Registration in India?
No. This is a common misunderstanding.
The ₹20 crore minimum corpus represents the fund’s required investor commitments. It isn’t a government registration fee or an amount that the promoter must personally pay to SEBI.
The actual cost of establishing an AIF involves several separate expenses.
These may include:
- SEBI application and registration fees.
- Legal documentation and fund structuring.
- Trust or other entity formation.
- Tax and regulatory advisory services.
- Compliance systems and professional support.
- Appointment of service providers.
- Fund administration and accounting.
- Audit and reporting expenses.
- Operational costs during fundraising.
Your overall setup budget will depend on the fund category, legal structure and complexity of the proposed investment strategy.
For example, a fund investing in early-stage startups may have different operational requirements from a Category III fund following a complex trading strategy.
It’s useful to prepare two separate budgets: one for meeting the fund’s investment commitments and another for establishing and operating the fund.
What Is the AIF Registration Process in India?
Once you’ve decided on your fund’s investment strategy and estimated capital requirements, the next step is registration with SEBI.
The AIF registration process in India generally involves the following steps.
Step 1: Choose the Appropriate AIF Category
Decide whether your investment strategy falls under Category I, Category II, or Category III.
Your choice affects the fund’s investment restrictions, operational requirements and compliance obligations.
Step 2: Establish the Fund Structure
An AIF may be established as a trust, company, limited liability partnership or other permitted body corporate.
Many AIFs in India use a trust structure, but the appropriate choice depends on the fund’s objectives and legal considerations.
Step 3: Prepare the Required Documents
Common documents include:
- Fund formation documents.
- Details of the sponsor and investment manager.
- Investment strategy and proposed fund structure.
- Financial and eligibility declarations.
- Private Placement Memorandum (PPM).
- Information about key investment team members.
- Applicable compliance policies.
Step 4: Submit the Application to SEBI
The applicant submits the prescribed application with the relevant documents and fees.
SEBI reviews the information and may request clarification or additional documents.
Step 5: Complete Registration and Scheme Requirements
Once registration is granted, the fund must complete the applicable scheme-level requirements before raising and deploying investor capital.
These may include filing the PPM, completing due diligence and satisfying the relevant fundraising conditions.
How Can an AIF Registration Consultant in India Help?
Setting up an AIF involves financial planning, legal documentation and several regulatory decisions.
An AIF registration consultant in India can help fund sponsors understand these requirements before committing substantial resources.
Depending on the engagement, professional assistance may include:
- Evaluating the proposed fund structure.
- Identifying the appropriate AIF category.
- Explaining corpus and investment requirements.
- Coordinating fund formation documents.
- Assisting with SEBI registration.
- Supporting preparation of the PPM.
- Helping address regulatory queries.
- Explaining ongoing compliance responsibilities.
However, hiring a consultant doesn’t guarantee registration approval or successful fundraising.
Before choosing a consultant, ask about their experience, services, professional fees and responsibilities during the registration process.
Common Mistakes to Avoid When Starting an AIF
Starting an AIF requires careful planning. A few misunderstandings can lead to unnecessary expenses or delays.
Confusing Corpus With Registration Cost
The minimum corpus is the amount committed by investors to the scheme. It isn’t a registration fee paid to SEBI.
Ignoring Sponsor Contribution Requirements
The sponsor or manager may need to maintain a prescribed continuing investment. This should be considered when planning the fund’s finances.
Choosing the Wrong AIF Category
Different categories follow different investment and operational rules. Selecting a category without understanding these conditions can create problems later.
Underestimating Operational Expenses
Even after registration, the fund may incur costs for administration, audits, compliance, valuation and investor reporting.
Starting Fundraising Without Proper Planning
Before approaching investors, establish a clear investment strategy, understand the applicable private placement rules and prepare the necessary documentation.
Frequently Asked Questions About AIF Investment Requirements
A standard AIF scheme generally requires a minimum corpus of ₹20 crore. The sponsor or manager must also maintain the applicable continuing investment, and the fund must satisfy SEBI’s registration and operational requirements.
₹1 crore is generally the minimum investment amount for an individual investor in a standard AIF, not the minimum corpus required to establish a scheme. A standard AIF scheme generally requires ₹20 crore in total commitments.
No. The corpus represents capital committed by investors to the fund. SEBI registration fees and other setup expenses are separate.
A startup founder may participate in establishing an AIF through an eligible structure, provided the proposed fund, sponsor, manager and key personnel satisfy applicable SEBI requirements.
No. Certain specialised structures have different requirements. In particular, the angel fund framework was revised in September 2025, introducing a different approach to fundraising and investor eligibility.
Yes. A fund seeking to operate as an AIF under SEBI’s regulatory framework must obtain the required registration and comply with applicable regulations.
Conclusion
Starting an Alternative Investment Fund in India is not about collecting ₹20 crore in investor commitments. There are important factors to keep in mind. You must look at the investment amount each investor has to put in. The sponsor also needs to make contributions. Then there are the registration costs and the expenses needed to run the fund day to day.
The smartest way to start is by having an investment strategy and a realistic financial plan. When you know what the rules are, for your chosen AIF category, the process becomes much simpler. You can design the fund structure gather the required documents and move forward with registration with confidence.
For companies that are planning to register an AIF in India, going through these requirements early can help avoid errors. It also makes the whole registration journey smoother and more manageable.